Right now, in the UK, we can’t stop thinking about and discussing the direct and indirect impacts of the decision of the UK to leave the EU, especially with all the unknowns, twists, complications, and deals or no deals. So I’m sparing a thought for the UK Executives whose job it is to lead, manage and plan in these painful and uncertain times, as I’m sure many never want to experience such disruption ever again. But, unfortunately, it’s not just political change that can bring this about, it could just as well be out-of-the-blue shocks like an environmental disaster or a global economic crash or a catastrophic supply chain malfunction. Either way, the ability to make good decisions in uncertain and risky times is a skill that leaders need to have.
So let’s start with some business theory for you to think on: risk and uncertainty are not the same. If you know the possible range of outcomes, but not which individual outcome will happen, this is risk not uncertainty. Uncertainty is when outcomes are completely unknown – its when something happens that wasn’t even imagined. So your first call is to separate risks from uncertainty because you can mitigate risks (or even exploit them to your benefit). For example, a business leader can identify if their business is at risk of delay in the transit of raw materials due to Brexit, and if that risk is high enough, then actions to stockpile can be taken. On the flip side, a storage company could benefit from identifying this risk and turning it into an opportunity. Much of the potential disruption to businesses from Brexit can be broken down into identifiable risks, which can be managed with forward-thinking, mitigating actions and “what-if” plans.
Uncertainty is totally different and it’s not very possible to plan for something that looms up without any sign of its coming. Luckily, simply put, there is more risk than true uncertainty with Brexit and we can draw some comfort from that, but nevertheless, what should leaders do given there is some real uncertainty around right now?
They should make decisions as they are needed and they should inspire confidence, not concerns. Reflect on successful entrepreneurs for a moment, as making decisions with limited or incomplete information is in their DNA. The skills to break down complexity, focus, be decisive and action-orientated are all qualities found in the best CEOs of growth businesses. It’s when companies get bigger and have the resources to analyse opportunities in detail (together with complicated hierarchies of decision making) that the dangers of over-analysis and procrastination arise.
Because, unfortunately, some of the processes often advocated for making good decisions aren’t great for making fast decisions – the gathering information, considering alternatives and testing assumptions. And fast decisions matter when employees really want to know is what to do, or what to not do, given what’s happening real-time around them because without leadership they’ll speculate, spread rumours and lose confidence. So it is better to make a decision that might prove wrong than to be indecisive and rudderless. But not a crazy decision! A decision based on facts, experience and insight, but also, by necessity, made in the face of incomplete information. Leverage your inner ‘growth CEO’ mentality, as growth CEOs rarely have the luxury of an army of resources to back up decision making: make up your mind first, then check it with the data and analysis you have to hand, communicate it and implement it. We all know self-belief can take you a long way, so be really considered about what you say to your team: don’t dwell on the causes of the uncertainty, rather paint a picture of the route to an optimistic future.
Reflecting on it, it pleases me that if companies take the time to do so, it should be possible to identify many of the risks coming to businesses from Brexit, and hopefully, the uncertainty isn’t as big as some would have us believe. Success does require leaders to invest time analysing these risks and, most probably, to spend some resources on mitigating them. Risk management isn’t generally the favourite discussion topic for many Board members – it’s perceived a little dry – but given the circumstances it’ll no doubt be a bit more lively (if any of us can actually stomach any more talking about Brexit). I’m reminded that historically companies born in difficult times, or those who survive them, often go onto extraordinary success and when we finally look back at Brexit 2019 I’m sure we will point to CEOs who took calculated risks, seized opportunities and made brilliant decisions which propelled their businesses forward. So be action-oriented towards risk, make good and fast decisions in the face of uncertainty and bon courage!